August 13, 2013

Cost Effectiveness of Health Information Exchange

At some point it was decided that the exchange of clinical information between facilities of care is lacking in both quantity and quality, and it was further decided that a drastic increase in frequency of such exchange will improve the health of people and the quality of care they received, while reducing costs of health care. The idea, which is almost as old as medicine itself, has been perfected by physicians over centuries of evolving documentation standards and sharing of knowledge in general. As medicine became a service provided by a bewildering array of entities in parallel and/or in sequence over one lifetime, the need for clinical information exchange increased exponentially, making this particular activity a perfect candidate for computerization in the Internet age. Since all computerized functions are better and cheaper than their manual predecessors, it was decided that the Nation must engage in sophisticated exchange of health information to the point where one’s medical records are omnipresent wherever one may need or want to perform, or have performed, a health related function. That’s nice, a bit creepy perhaps, but nice nevertheless, possibly useful, and certainly very convenient.

The Department of Health and Human Services (HHS) is the government agency in charge of making Health Information Exchange (HIE) a reality in this country. A recent HHS pamphlet published in Health Affairs provides an update on the state of HIE for the first term of the current administration (2008 to 2012), spanning the first four years of legislation, rulemaking and financial incentives in support of computerizing medical records and their exchange across facilities of care. The results are based on a survey of hospitals that were asked if they “electronically exchange/share” any one of four types of clinical information (clinical summaries, medication lists, lab results, radiology reports) with other hospitals or ambulatory providers inside or outside their own system. The study shows (see below) that the rates of hospital exchange/sharing of information with any other entity, which stood at 41% in 2008, jumped to 58% by 2012. That’s a whopping 17% over 4 years or slightly over 4% per year on average, although there is a clear acceleration after 2010 when financial incentives became a reality.

According to CMS reported numbers, the government paid out roughly $14.5 Billion in incentives to hospitals and health professionals by the end of 2012, or approximately $850 Million for each 1% increase in self-reported electronic exchange/sharing of health information by hospitals. The survey did not inquire about the levels of such exchange, so there is no way to ascertain if hospitals with affirmative responses are exchanging all clinical information of the types listed, most of it, some of it, or occasionally some things here and there. A quick back of the napkin calculation indicates that upwards of $27 Billion will be needed to sustain the current growth rate for the next 8 years or so, in order to achieve universal exchange, and that’s without counting the startup costs of State HIE organizations, Regional Extension Centers and other grant making activities for this purpose, not to mention privately funded infrastructure and operational expenses. And here I have to make a confession: these dollar amounts are in a realm of finance where I cannot tell if these are reasonable expenditures, an incredible bang for the buck, or outrageous waste.

It makes perfect sense that making pertinent information electronically available at the point of care is helpful, and test results, clinical summaries and medication lists are obviously pertinent in most cases. But then, it also makes perfect sense that propping a clogged artery open with a stent should be very helpful in most cases. What is not obvious without additional research is whether there are cheaper and less invasive methods to achieve the same results. Does the most cost effective method of making clinical data available at the point of care consist of a nationwide network of big-iron servers and Federal protocols, continuously fed by hundreds of thousands of clinicians furiously typing and clicking away at hostile terminals? Maybe. Maybe not.

Unencumbered by any doubts, HHS is proposing to forge ahead with “Principles and Strategy for Accelerating Health Information Exchange (HIE)”, because “real-time interoperable HIE” is critical to the success of the Affordable Care Act and its various programs. Note that HIE just got a couple of extra qualifiers prepended to it. Interoperable exchange implies that the exchange is taking place between machines (not people), and that those machines can both exchange information, and understand it well enough to put it to some use. Interoperability is all about the exchange of computable data elements and their analysis. So having a piece of paper (or a PDF) containing all pertinent information, magically appear in the hands of a hospitalist or other care provider, on-demand, does not qualify as interoperability. It doesn’t qualify as real-time either, because real-time in computer language means just as it happens, with no delays and no waiting, so when the doctor updates something in his computer, the hospital computer knows right away, and vice versa.

And how does HHS propose to reach this ubiquitous HIE state? There are lots of steps to accelerate, strengthen, advance, enable, align, support, educate and other operative actions, involving standards, stakeholders, committees, agencies, States, ecosystems, policies, guidance, regulations, incentives, rewards and such, all meshed together in a “multi-year approach that is consistent, incremental, yet comprehensive”, culminating with HIE becoming “standard business practice for providers”. If you are tempted to discard this as fluff, think again because “HHS’ approach to accelerating HIE among health care providers is expected generally to follow a natural lifecycle of incentives followed by payment adjustments and finally through conditions of participation in Medicare and Medicaid programs”. A natural lifecycle indeed...